NJ workers’ comp audit: 2 out 3 claims improper, potential for abuse
Most payments made to injured employers through New Jersey's workers' compensation program are incorrect, according to a report released Thursday by the Office of the State Comptroller.
The OSC report suggests the Division administering the program has the ability to improve worker safety, save money and minimize the number of claims. In response, the Division has vowed to make changes where it can.
"The workers' compensation program is supposed to address some of the root causes of the injuries," Acting State Comptroller Kevin Walsh told New Jersey 101.5. "What we identified ... was an overall systemwide failure to focus on that obligation."
According to the report, which looked primarily at a sample of workers' comp reports and payments from 2012 through mid-2015, 23% of incidents received zero follow-up action, such as site visits or safety officer interviews. The same faulty gate at one work facility resulted in 23 workers' comp claims from 2007 to 2019, resulting in $1.5 million paid out in benefits, the report found.
OSC's audit of the program also found hiccups related to outside vendors who are hired to manage medical services for injured workers. Medical reports related to workers' doctor's visits were received, on average, 32 days later. In violation of the vendor's contract, 87% percent of surveyed reports did not come with an estimated return-to-work date.
"It could result in employees being out longer than they should, and then costing the state both in terms of money ... and in terms of the lost productivity of employees who are out and don't need to be," Walsh said.
Of the 554 compensation payments surveyed, about two-thirds were found to be incorrect. Improper payments related to the sample claims amounted to more $54,000, the report said — some resulted in workers getting more than they should have, and others meant workers weren't awarded enough.
Walsh said the state lacks a system for consistent and predictable payments. Instead, he said, payments are calculated in an "ad hoc employee-by-employee way."
Implementing clear and consistent calculation processes is among the recommendations listed in OSC's report, for the Department of Treasury's Division of Risk Management. The report also suggests that policies be established to manage multiple claims effectively, in order to prevent potential abuse of the system and to improve safety.
The majority of claims through the state's workers' compensation program are generated from high-risk facilities, such as state prisons and psychiatric hospitals, the Division said in a letter responding to the audit. Multiple claims, the Division said, do not necessarily point to potential abuse. The Division said it can make recommendations for repairs or changes, but does not have the authority to mandate them.
Addressing the issue of improper payments, the Division said it plans to make enhancements to its current template to better capture data related to how much a worker should earn while benefiting from the program.
The Division also noted recent improvements related to oversight of vendor services. Quarterly performance reviews allow the Division to retain vendor fees when performance is not deemed satisfactory. Since early 2018, the Division said, this process has resulted in the forfeiture of over $626,000 in vendor fees.
Changes made to the Division's manual, along with notifying staff of the changes, are expected to occur within 90 days.
"One of the things that we do when we do an audit like this is evaluate down the road whether recommendations have been followed, and that's certainly something that we'll do in this instance," Walsh said.
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